How to Transfer LLC Ownership in New Hampshire

There may come a time in the life cycle of your business where you or another member needs to sell or otherwise transfer their interest in a New Hampshire LLC. And although forming an LLC is usually easier and requires fewer formalities than a corporation, one drawback is that these kinds of transfers are a little more complicated.

A corporation’s ownership is vested in stock, which can be bought and sold. An LLC is composed of members with a vested membership interest in the company. Transferring LLC ownership interest usually requires the consent of all members, while in a corporation a stockholder can freely transfer their interest as long as the buyer is qualified.

So how can you transfer ownership interest in a New Hampshire LLC? Let’s take a closer look.

If you need to form your LLC first, see how our New Hampshire LLC formation service can help. But it doesn’t stop at formation, we have a wide range of formation and compliance tools and services to help you make your business a success. 

First Things First: New Hampshire Operating Agreements

Creating an Operating Agreement (OA) is a key element to the LLC formation process. The purpose of an Operating Agreement is to provide a comprehensive record of how the business is run.  According to New Hampshire law, an Operating Agreement may be written, oral, or implied. This is the rule, but it’s easy to see why a written OA is preferable.

An Operating Agreement details the structure of your limited liability company and the rights and responsibilities of its members. Some topics to consider covering include:

• Percentages of ownership interest
• Profit and loss distributions
• Frequency of meetings
• How to handle member disputes 
• Roles and responsibilities of managers 
• Provisions for transferring ownership 
• Dissolution procedures
• What happens when a member passes away 
• Buy/Sell agreement provisions

Having these things in writing shortly after the formation of the LLC can save you a lot of hardship as the business grows. This is a legally binding agreement that supersedes state laws regarding LLC transfer of ownership. If you don’t have an Operating Agreement, consider using our Operating Agreement templates to help you draft an OA that fits your LLC’s needs.

How to Transfer LLC Ownership in New Hampshire

In some states, an LLC transfer of ownership can result in the dissolution of the business. There are two ways to get around that. One is a partial transfer. This is when only some members are trying to transfer their interest. A full transfer is a complete sale of the limited liability company.  

Partial Transfer in New Hampshire: The Buyout Provision

When one member of the LLC wants to leave, the remaining members can opt to buy out their interest in the business. Many LLCs include a “first right of refusal” provision in their Operating Agreement. This allows existing members to unanimously agree to buyout the exiting member rather than transferring the interest to a third party. If a transfer is preferred, all members must agree to transfer LLC ownership in New Hampshire to a third party. Unless otherwise stated in the OA, state law will apply. According to New Hampshire law, a third-party transferee will not automatically receive management rights as part of the LLC transfer of ownership. 

Full Transfer: Selling Your New Hampshire LLC

A third-party buyer may opt to purchase the entire business or just the business assets. All members must agree to the sale and terms of the contract. This transfers the ownership interest of all members. Because of the complexity of buy/sell agreements, it is a good idea to seek legal counsel. 

Other Possible Issues

There are a number of other issues that may arise in the course of your LLC membership. You can’t predict them all, but here are a few you may want to consider. 

Death of a Member

When a member of an LLC dies, their interest is treated as part of the estate. The heirs receive the deceased’s right to distribution. However, they don’t receive management rights. In many cases, the remaining LLC members will opt to buy out the interest from the heirs. 

Dissolution/Reformation

LLC transfer of ownership isn’t always a seamless process.  Even when a thorough Operating Agreement exists, there can be difficulties. Dissolving the existing limited liability company and reforming with new membership is a valid option. There are a lot of factors that go into this decision including the financial health of the business, member dynamics, and growth predictions. File Articles of Dissolution with the New Hampshire Secretary of State to avoid being charged annual fees. 

File proper change of ownership paperwork in New Hampshire

Change in ownership can be noted on the next Annual Report. If the transfer of LLC ownership isn’t listed on the Annual Reports, you can submit the change in writing to the Secretary of State.

ZenBusiness Can Help with Your New Hampshire Business

The key to successfully transfer LLC ownership in New Hampshire is to have a detailed and comprehensive Operating Agreement. Without clear procedural direction, there’s room for interpretation and conflict. ZenBusiness’s OA formation tool can help you make sure that all of your bases are covered.